Crypto is a digital currency that allows you to send money instantly and securely online without the need for a middleman, such as a bank. It can also be used to buy digital goods and services, and is accepted by some retailers and physical stores. Unlike traditional currencies, crypto is decentralized and managed by a global network of computers using free software. There are over 20,000 different cryptocurrencies, but Bitcoin, Ethereum, and Bitcoin Cash are the most popular.
Some people hold crypto as an investment because it can appreciate in value over time. However, it can be risky and you should do your research before investing in any cryptocurrency. For example, prices can fluctuate widely and may be subject to government regulation. In addition, it’s possible that your crypto could be lost if you don’t take appropriate security measures, such as storing your private keys in a secure wallet and avoiding public Wi-Fi.
Supporters of crypto say it has several benefits over other forms of money. These include:
Portability
Because cryptocurrencies aren’t tied to a financial institution or government, they can be moved from one wallet to another without the need for a third party. This makes it easier to access your funds, even if you lose your phone or computer. This can be a big advantage in developing countries where many citizens don’t have bank accounts.
Inflation resistance
Cryptocurrencies are often praised for their ability to resist inflation, which is when prices rise over time. This is because cryptocurrencies aren’t backed by governments or monetary authorities and they don’t rely on precious metals or intrinsic worth for their value. Instead, they rely on public trust in the system and in the technology that supports it.
Transparency
Every transaction that happens on a crypto network is recorded publicly and can be viewed at any time. This means that there is no room for manipulation of transactions or changing the money supply mid-game, as is sometimes done with fiat currencies. Also, unlike a credit card payment, a cryptocurrency transaction isn’t reversible, which reduces fraud and saves merchants money on processing fees.
Irreversible & fast
When it comes to international transfers, crypto is more affordable than sending funds via wire transfer. It’s also much faster, with most transactions taking a matter of minutes or seconds to complete.
Taxes
The way the IRS treats crypto depends on how it is used. If you sell or exchange it for a good or service, that’s considered a capital gain and you will need to report it on your taxes. But if you hold it as an asset, then it’s treated the same as stocks or bonds and you will only pay taxes when you sell or withdraw your assets from the market.
Investing in crypto isn’t right for everyone, but if you do it carefully, it can be a valuable part of your investment portfolio. To protect your crypto, make sure you use a strong password for your wallet and keep it in a secure place, such as a hard disk or hardware wallet. And be wary of public Wi-Fi, as hackers can steal your crypto if they know your seed words.
